Code 94: Goods Returned/Defective Merchandise

Overview

Code 94 deductions are issued when a customer returns merchandise or when products are classified as defective merchandise. These deductions recover costs associated with defective returns based on the supplier agreement terms.

Whether a Code 94 deduction is valid depends on the supplier agreement, defective allowance terms, whether allowances are deducted off invoice, and whether defective merchandise return requirements were followed.

Suppliers should carefully review defective allowance terms because Code 94 deductions may be invalid when allowances have already been applied.

How to Prevent Valid Code 94 Deductions

• Review supplier agreement terms regarding defective merchandise responsibility.
• Understand whether defective allowances are deducted off invoice or recovered through deductions.
• Negotiate higher defective allowance percentages if return costs are consistently high.
• Consider specifying in supplier agreements that defective goods should be returned to the supplier.
• Monitor product quality to reduce customer returns and defective claims.

Code 94 deductions are generally valid when the supplier agreement states that the supplier is responsible for defective return costs and the supplier is not already deducting a defective allowance from invoices.

If a defective allowance exists in the supplier agreement, the supplier is usually responsible only for costs exceeding that allowance if the agreement specifically states this requirement. Suppliers should not receive Code 94 deductions when they are already applying the defective allowance off invoice.

Can It Be Disputed?

Yes. Code 94 deductions can be disputed when they meet specific invalid claim scenarios.

• The supplier agreement includes a defective allowance and the supplier is deducting that allowance off invoice.
• The supplier agreement includes a defective allowance but does not state that excess defective return costs are the supplier's responsibility.
• The deducted amount does not match the actual item cost.
• The supplier agreement requires defective goods to be returned, but Walmart did not return the merchandise.
• The claim does not comply with supplier agreement terms.

Virtual Claims and Unsafe Returns

If a supplier agreement requires defective goods to be returned but the merchandise was not returned, disputes may apply unless the product was unsafe to ship.

• Hazardous materials that are damaged or unsafe to transport.
• Non-hazardous products that leak or are severely damaged during shipment.
• Liquids, powders, or gels that cannot safely be returned.
• Broken glass products that create safety risks during packaging and shipping.

Claims meeting these conditions are considered Virtual Claims. Virtual Claims that do not meet these requirements can be disputed through the SPS Deductions app. These claims are identified with division 13 and store number 9070.

How to Dispute Invalid Code 94 Deductions

Code 94 disputes generally fall into two categories: customer return claims and Walmart.com Returns Center claims.

Customer Return Claims

• Defective allowance applied off invoice: Provide the supplier agreement showing the defective allowance terms and invoice proof that the allowance was deducted.
• Supplier agreement states defective returns are not the supplier's responsibility: Provide the supplier agreement.
• Supplier agreement requires defective goods to be returned: Provide the supplier agreement and documentation showing goods were never received.
• Deduction amount exceeds actual item cost: Provide invoices showing the actual cost per item.

Walmart.com Returns Center Claims

Walmart.com return claims are listed under division 46 and store 9462. These claims follow a dedicated Returns Center dispute process.

• Download and complete the Defective Merchandise, Handling Fee, and RTV Freight Claim Form.
• Include claim number, invoice date, disputed amount, and dispute reason.
• Attach backup details and supporting documentation.
• Submit a case through Partner Support under Returns > Returns Chargebacks.

Walmart.com Claim Requirements

• Claim form filename must follow the format: VID_VENDOR#_VENDORNAME_MMM_YYYY.
• Claim files must be submitted as .xlsx format.
• Claims under $50 will not be reviewed.
• Claims must be submitted within 90 days from invoice post date.
• Claims must be submitted in monthly batches, not individually.
• Pricing or inflex/multi-box issues should be handled with the Category Manager.

Samsclub.com Returns

Samsclub.com Code 94 returns have claim numbers beginning with 184919. Suppliers with questions or disputes regarding these claims should contact the Samsclub.com returns dispute team.

Supporting Documentation

• Supplier agreement showing defective allowance terms.
• Invoices showing defective allowance deductions were already applied.
• Proof of actual item cost.
• Documentation showing defective goods were not returned.
• Returns Center claim forms and APIS backup documentation.
• Quality records supporting merchandise condition disputes.

Conclusion

Code 94 deductions require careful review of supplier agreements, defective allowance policies, and return responsibilities. Suppliers can reduce these claims by managing product quality, negotiating clear return terms, and ensuring defective allowances are correctly applied. When deductions are invalid, detailed documentation and the correct dispute channel provide the best opportunity for recovery.